Understanding the “Buyerarchy” of Needs in Spending

Every once in a while, I stumble across this wonderful little picture from Canadian artist Sarah Lazarovic entitled “The Buyerarchy of Needs”

buyerarchy of needs

The idea behind the picture is that whenever you need something, you should start at the bottom tier of the pyramid and work your way upward, only resorting to buying when the lower levels don’t fulfill that need.

It wasn’t until I ran across it again the other day that I realized how incredibly well it lines up with how I acquire things that I need and want. I approach almost all of my purchases via the “buyerarchy,” not so much as a conscious thing, but just as a general approach to spending money.

Let’s walk through that a little bit.

First, I try to use what I already have on hand.

Whatever need or want that I think I have, I’ll first turn to what I have on hand. I’ll identify what exactly it is that I want to achieve or do, then try to see what I have on hand that will get me to that destination.

For example, if I want to read a book, I’ll usually first look through my book collection to see if there’s something that tickles my fancy. I do the same for any kind of media that I already have — movies, board games, and so on.

If I’m making food and I don’t have the exact ingredient I need, I’ll see if there’s a substitute I can use. I usually make pizza dough with yeast, but if I’m out of yeast, I use my backup pizza dough recipe that uses baking powder.

This often involves using things for purposes that they weren’t originally intended for. For example, if I need to clean out the sink and don’t have the stuff I usually use to clean the sink on hand, I’ll usually use my “default” cleaning agent, liquid castile soap. I find that it is an extremely good idea to have a few very wide purpose general use items around the house that can work in a pinch — things like a crescent wrench and a screwdriver set and some castile soap. They just handle lots of problems that there might be a good specific solution for, but the general solution works almost as well.

Sometimes I’ll have a desire for an “upgrade” for something I have on hand already. If that happens, I ask myself whether or not that upgrade is truly useful to me in any way. Usually, the upgrade only gives me a very minor feature, one that I don’t actually need or even want. I’m just bedazzled by the “upgrade.”

This filters out a lot of things that I might buy. I’d say this step alone takes care of the majority of items I might purchase.

A key tactic here is to make my desire less specific. I might have a specific book in mind that I want to read, for example, and that might put me in a situation where no other book is acceptable. Wanting to read a specific book is fine, but in that case, I’ll usually toss that specific idea onto a wish list or get on the waiting list for it at the library, and in the interim, I’ll step back and look for something more general, like a “thoughtful book” or a “page-turning adventure book,” more in line with what I’m generally looking for.

If that doesn’t work, I try to borrow something that will handle the job.

“Borrow” takes on a pretty broad range of meanings here. I don’t simply mean walking over to a neighbor’s house, knocking on the door, and asking for something, though that’s one technique. Rather, I mean any situation in which I temporarily use something that I don’t own.

For starters, I borrow a wide array of items from our neighbors, friends and family. This is particularly true if it’s a fairly expensive item that I’ll really only need to use once or twice. For example, in the last several months, I’ve borrowed a power drill from one friend and a particular type of baking pan from another friend. If I find that I need that item again, then that’s a good sign that I should move past borrowing to another level of the “buyerarchy.”

If I need something like this, I simply ask. I’ll often text a group of local friends and ask them if they have a drill, baking pan, bread machine or whatever that I can use.

I also “borrow” books, movies and audiobooks from the library. I “borrow” movies on occasion from Redbox. Basically, if there’s a service where I can borrow something for free or for a very low cost, particularly when it’s an item that I know I’ll probably only use once, I tend toward borrowing it.

I also “borrow” food items in a variety of ways. We often have potluck dinners with friends, which is really just a form of borrowing food. I’ll often borrow specific food items in a pinch from a few different neighbors, who will do the same from us, because it’s not worth driving 15 minutes one way to get a single item for a recipe.

Basically, if I’m not sure I’m going to use something that’s not consumable more than once, I try to borrow it first.

If I can’t borrow something, I’ll try trading for it.

Trading is another strategy I employ frequently to acquire things I need or want. It enables me to pass on things I don’t or won’t use to someone who might use them in exchange for something I might actually use.

I often do book swapping, movie swapping and video game swapping with friends. I’d estimate that a third of the books I currently have were originally owned by friends that came into my possession due to swapping, as is some portion of our DVD/Blu-ray collection. As for video games, I tend to like to play long, RPGs and strategy games and I have a few friends that do the same, so we’ll swap video games after we’ve played through them.

I am constantly swapping board games. I find that most games get old for me after a few plays, while there are a few truly evergreen games that I still love to play after many, many plays. I am constantly swapping the ones that get old, seeking ones that are “evergreen” for me that I’ll keep permanently.

My wife and I are gardeners, as are several neighbors, so we often swap produce throughout the year. We’ll give lots of fresh herbs to our neighbors (we have a garden that’s mostly perennial herbs) and they’ll give us all kinds of fresh produce during the late summer peak season.

I’ve swapped homemade canned goods with people. I’ve swapped home-brewed craft beer with people.

Swapping is simply a great way to get something you want in exchange for something you’re not using that someone else may want. You both win, because you both will get something you’ll use more than what you have right now.

For me personally, swapping is about more than just acquiring a new thing. I find value in giving something I’m not using to someone who will actually use it, particularly if I’m close to that person. I really love local board game swaps, for example, not just because of the new games I pick up, but because of the games I put in the hands of friends that I know they’ll enjoy with their families and their other friends.

If I can’t swap for it, I’ll try to make it.

In my own personal “buyerarchy of needs,” making it is usually done in parallel with using secondhand stores or thrift shops (the next step on this list). I tend to make a lot of food items, for example, and I wouldn’t look in secondhand shops for those.

I tend to make a lot of things that are perishable, that benefit in some way from being handmade, or that are within my skill set (or are on the edge and I’m testing my skills in making it). Often, it’s a combination of these attributes.

With perishable items, I tend to make things like foodstuffs from scratch. I have jars of things like sauerkraut and preserved lemon in the fridge simply because I’d rather make it myself than pay multiples of the cost to buy it at the store. My version usually tastes better, too.

I also like to make a lot of household supplies, like my laundry soap. It’s just an equal mix of washing soda, borax and soap flakes mixed together and I use a tablespoon in each laundry load. It costs a fraction of what laundry soap costs at the store.

I like to make gifts for people when I have the time. I usually use that as an opportunity to engage in a hobby that produces something or tests my skills in some fashion, usually enhancing them. Here are some of the many homemade gifts I’ve made over the years.

I’m not the handiest person in the world, but I also sometimes repair broken items or make things that serve as an adequate substitute for those items. I’d far rather do this if I can than call a repairperson or just buy a replacement.

Furthermore, the act of making something is pleasurable in itself. I feel good when I make a good meal. I feel good when I repair something to service. I feel good when I make a gift for someone. That act has far more meaning and personal value than just buying something.

If I can’t make it, I’ll look at thrift stores or secondhand shops.

If all of those solutions still don’t work, my next step is to look in thrift stores or secondhand stores for the item. I do this for all kinds of things, from small kitchen appliances to clothing to toys to video games. I buy all of that stuff secondhand quite often.

My usual approach is to make a list of things that I need that aren’t particularly urgent and then take that with me on a lazy Saturday afternoon to a few secondhand shops in the area to find what they have that matches my needs. During the spring, I’ll do the same thing with a long list as I go to yard and garage sales; many towns in my area have “citywide” garage sales and yard sales during the month of May.

I tend to have a lot of success with secondhand clothes, books, movies, video games, small kitchen appliances, kitchenware, toys, and sporting goods. With those types of items, I practically expect to find something I can use secondhand.

If I can’t make it, I’ll break down and actually buy it new.

If all of the above fails, then I’ll look to buy that item new. This is the last option.

Most new purchases fall into one of three categories: consumable things like food and household supplies, other urgent purchases, and other non-urgent purchases.

If it’s consumable stuff like food and household supplies, I usually just shop at a nearby discount grocery store and buy a lot of store-brand items.

If it’s something else that’s truly urgent, I usually try to turn to someone I trust locally. I have a trusted mechanic and a trusted HVAC guy and so on, people who have done a good job for me many times in the past.

If it’s not urgent, I’ll usually spend a lot of time researching the purchase before actually buying, and this usually involves watching for prices and sales. I’m very patient with things that I’ve decided to buy that aren’t particularly urgent. Patience saves a ton of money.

A book is a great example of this “buyerarchy.”

Let’s say, hypothetically, that I want to read a book of some kind. I just finished the book I was reading and I want to pick up something else.

The first thing I’ll do is see what I have on hand. I’ll look through my bookshelves and my Kindle library and see if I find something that really intrigues me.

If that doesn’t work, I’ll borrow a book by going to the library or asking a friend to borrow a book from them. This is my immediate next step if I don’t already have a book on hand to read.

I also do a lot of book swapping. There are a lot of Little Free Libraries in my area and I’ll often take a book from there and replace it with a book I’ve finished reading. I also have friends with which I swap books.

My next step is to check out secondhand book stores if I still want a book. This is often where I look if I read a book from the library and decide that I want my own print copy. There are a few secondhand book stores in the Des Moines area that I stop by with some regularity.

It’s only after all of those steps are done that I’ll actually consider buying a book. In those situations, I usually wait for a sale on a Kindle version of the book. I usually use this Kindle price drop tracker to find the one I want on sale.

90% of the time, my own collection of print and Kindle books along with the library takes care of my reading needs, and probably 90% of what remains is fulfilled by borrowing books from friends or swapping books. I’m a very avid reader and I really only end up having to buy a few books a year at this point.

Don’t overthink it; rather, try to make it natural.

The goal of the “buyerarchy of needs,” at least for me, isn’t to make up a set of structured rules that you have to follow. Rather, it’s just a pattern of living, something that eventually becomes ingrained enough that you don’t have to think about it. You just do it.

If this doesn’t describe your normal approach to buying things but it seems like a much more financially prudent approach, I suggest starting by simply asking yourself “What can I use that I already have?” whenever you have an impulse to buy something. Get to the point where that’s completely natural, then add another question to help filter the buying impulses that survive the first one (that’s now instinct).

Eventually, what you’re aiming to do is train yourself so that looking for ways to acquire stuff that doesn’t involve spending becomes the natural way.

Your first reaction when you have a need or want shouldn’t be to head to Amazon or Target. Rather, it should be to look at what you have on hand, look at places you can borrow those things, look at what you can make yourself, and so on. If you can make that your natural instinct for everything, you’ll find yourself resorting to spending money far less often, and that will result in a lot more money in your pocket and a lot less rarely used items cluttering up your house.

Good luck!

Trent Hamm
Trent Hamm
Founder of The Simple Dollar

Trent Hamm founded The Simple Dollar in 2006 after developing innovative financial strategies to get out of debt. Since then, he’s written three books (published by Simon & Schuster and Financial Times Press), contributed to Business Insider, US News & World Report, Yahoo Finance, and Lifehacker, and been featured in The New York Times, TIME, Forbes, The Guardian, and elsewhere.

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